Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced
financial results for the 13 and 52 week periods ended December 27,
2016.
Fourth Quarter
Year to Date ($000's)
2016
2015
% Change
2016
2015
% Change
Total revenue $ 484,710 $ 454,351 7 % $ 1,990,714 $
1,807,368 10 % Income from operations 30,839 33,713 (9 %) 171,900
144,565 19 % Net income 20,725 22,982 (10 %) 115,598 96,894 19 %
Diluted EPS $ 0.29 $ 0.32 (10 %) $ 1.63 $ 1.37 19 %
Results for the fourth quarter included the following
highlights:
- Comparable restaurant sales growth of
1.2% at company restaurants, including a negative impact of
approximately 0.5% related to the calendar shift of the Christmas
holiday, and 2.0% at domestic franchise restaurants;
- Restaurant margin, as a percentage of
restaurant sales, decreased 44 basis points to 17.1%. Wage rate
inflation and higher costs associated with payroll taxes, insurance
reserve adjustments and gift card fees more than offset the benefit
of lower food costs;
- Restaurant margin dollars increased
4.0% to $82.4 million from $79.2 million in the prior year;
- Diluted earnings per share decreased
10.3% to $0.29 from $0.32 in the prior year primarily due to
restaurant margin performance, higher general and administrative
expenses and higher depreciation costs; and
- Nine company-owned restaurants were
opened, including four Bubba’s 33 restaurants.
Results for the full year included the following highlights:
- Comparable restaurant sales growth of
3.5% at company restaurants and 3.3% at domestic franchise
restaurants;
- Restaurant margin, as a percentage of
restaurant sales, increased 134 basis points to 18.7%. The benefit
of lower food costs more than offset the impact of higher wage rate
inflation;
- Restaurant margin dollars increased
18.7% to $368.9 million from $310.8 million in the prior year;
- Diluted earnings per share increased
18.8% to $1.63 from $1.37 in the prior year. During fiscal 2016, we
recorded a pre-tax charge of $7.3 million ($4.5 million after-tax)
related to a legal settlement which had a $0.06 impact on diluted
earnings per share and a 4.6% impact on diluted earnings per share
growth;
- 30 company-owned restaurants were
opened, including nine Bubba’s 33 restaurants; and
- We repurchased 114,700 shares of our
common stock for $4.1 million.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc.,
commented, "We are pleased to deliver another strong year of
results including a 19% increase in diluted earnings per share
driven by double-digit revenue growth and restaurant margin
expansion. We also delivered impressive comparable restaurant sales
growth during 2016 with an increase of 3.5%, and we extended our
streak of consecutive quarters of comparable restaurant sales
growth to 28 with our fourth quarter increase. Lastly, our strong
balance sheet and healthy cash flows allowed us to return $56.2
million of excess capital to shareholders through quarterly
dividend payments and share repurchases during 2016."
Taylor continued, "In 2017, we expect to open approximately 30
company restaurants and seven franchise restaurants this year,
which is over 7% growth system-wide. Going forward, the strength of
our brand continues to be our people and our operational focus on
delivering legendary food and legendary service."
Franchise Acquisition
Effective December 28, 2016, we acquired four franchise
restaurants in Florida and Georgia for an aggregate purchase price
of $16.8 million. The purchase price was paid in cash. Going
forward, two of the restaurants will be wholly-owned, while two
will be majority-owned. The acquisition did not have a net revenue
or accretive impact in 2016 as it occurred on the first day of our
2017 fiscal year.
2017 Outlook
Comparable restaurant sales at company restaurants for the first
55 days of our first quarter of fiscal 2017 increased approximately
1.5% compared to the prior year period.
Management updated the following expectations for 2017:
- Approximately 30 company restaurant
openings, including approximately six Bubba’s 33 restaurants;
- Food cost deflation of approximately
1.0% to 2.0% compared to previous guidance of low-single digit food
cost deflation; and
- An income tax rate of 29.0% to 30.0%
compared to previous guidance of 30.0% to 31.0%.
Management reiterated the following expectations for 2017:
- Positive comparable restaurant sales
growth;
- Mid-single digit labor inflation;
and
- Total capital expenditures of
approximately $170.0 million, excluding any cash used for franchise
acquisitions.
Cash Dividend Payment
On February 16, 2017, our Board of Directors authorized the
payment of a quarterly cash dividend of $0.21 per share of common
stock. This payment, which will be distributed on March 31, 2017 to
shareholders of record at the close of business on March 15, 2017,
represents a 10.5% increase from the cash dividend of $0.19 per
share of common stock declared during each quarter of 2016. Since
the inception of our dividend program in 2011, our cash dividend
per share of common stock has increased an average of 17.5% per
year.
Conference Call
We will host a conference call today, February 21, 2017 at 5:00
p.m. Eastern Time to discuss these results. The dial-in number is
(800)949-2163 or (719)785-1748 for international calls. A replay of
the call will be available for one week following the conference
call. To access the replay, please dial (844)512-2921 or
(412)317-6671 for international calls, and use 6581484 as the pass
code. There will be a simultaneous Web cast conducted at
www.texasroadhouse.com.
About the Company
Texas Roadhouse is a casual dining concept that first opened in
1993 and today operates over 520 restaurants system-wide in 49
states and six foreign countries. For more information, please
visit our Web site at www.texasroadhouse.com.
Forward-looking Statements
Certain statements in this release that are not historical
facts, including, without limitation, those relating to our
anticipated financial performance, are forward-looking statements
that involve risks and uncertainties. Such statements are based
upon the current beliefs and expectations of our management. Actual
results may vary materially from those contained in forward-looking
statements based on a number of factors including, without
limitation, the actual number of restaurant openings; the sales at
these and our other company and franchise restaurants; changes in
restaurant development or operating costs, such as food and labor;
our ability to acquire franchise restaurants; our ability to
integrate other concepts we develop or the franchise restaurants we
acquire; our ability to continue to generate the necessary cash
flows to fund our new restaurant growth, continue our share
repurchase program and pay a quarterly cash dividend; strength of
consumer spending; pending or future legal claims; breaches of
security; conditions beyond our control such as weather, natural
disasters, disease outbreaks, epidemics or pandemics impacting our
customers or food supplies; food safety and food-borne illness
concerns; acts of war or terrorism and other factors disclosed from
time to time in our filings with the U.S. Securities and Exchange
Commission. Investors should take such risks into account when
making investment decisions. Shareholders and other readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
We undertake no obligation to update any forward-looking
statements.
Texas Roadhouse, Inc. and
Subsidiaries Condensed Consolidated Statements of Income
(in thousands, except per share data) (unaudited)
13 Weeks Ended 52 Weeks Ended
December 27,
2016
December 29,
2015
December 27,
2016
December 29,
2015
Revenue: Restaurant sales $ 480,730 $ 450,529 $ 1,974,261 $
1,791,446 Franchise royalties and fees 3,980 3,822
16,453 15,922 Total revenue 484,710
454,351 1,990,714 1,807,368 Costs and
expenses: Restaurant operating costs (excluding depreciation and
amortization shown separately below): Cost of sales 162,638
159,301 669,203 644,001 Labor 147,395 131,517 590,256 524,203 Rent
10,103 9,741 40,580 37,183 Other operating 78,208 70,773 305,290
275,296 Pre-opening 5,294 4,640 19,547 19,116 Depreciation and
amortization 22,246 18,700 82,964 69,694 Impairment and closure 125
974 179 974 General and administrative 27,862 24,992
110,795 92,336 Total costs and expenses
453,871 420,638 1,818,814 1,662,803
Income from operations 30,839 33,713 171,900 144,565
Interest expense, net 353 479 1,255 1,959
Equity income from investments in
unconsolidated affiliates
280 353 1,111 1,641 Income
before taxes 30,766 33,587 171,756 144,247 Provision for income
taxes 8,858 9,567 51,183 42,986
Net income including noncontrolling interests $ 21,908 $ 24,020 $
120,573 $ 101,261 Less: Net income attributable to noncontrolling
interests 1,183 1,038 4,975 4,367 Net
income attributable to Texas Roadhouse, Inc. and subsidiaries $
20,725 $ 22,982 $ 115,598 $ 96,894
Net income per common share attributable
to Texas Roadhouse, Inc. and subsidiaries:
Basic $ 0.29 $ 0.33 $ 1.64 $ 1.38 Diluted $ 0.29 $ 0.32 $ 1.63 $
1.37 Weighted average shares outstanding: Basic
70,569 70,143 70,396 70,032 Diluted
71,215 70,865 71,052 70,747 Cash
dividends declared per share $ 0.19 $ 0.17 $ 0.76 $ 0.68
Texas Roadhouse, Inc.
and Subsidiaries Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
December 27,
2016
December 29,
2015
Cash and cash equivalents $ 112,944 $ 59,334 Other
current assets 87,315 74,479 Property and equipment, net 830,054
751,288 Goodwill 116,571 116,571 Intangible assets, net 3,622 4,827
Other assets 29,465 26,207 Total assets $ 1,179,971 $
1,032,706 Current maturities of long-term debt and
obligation under capital lease 167 144 Other current liabilities
279,360 256,498 Long-term debt and obligation under capital lease,
excluding current maturities 52,381 25,550 Other liabilities 89,821
73,332 Texas Roadhouse, Inc. and subsidiaries stockholders' equity
750,226 669,662 Noncontrolling interests 8,016 7,520
Total liabilities and equity $ 1,179,971 $ 1,032,706
Texas Roadhouse, Inc. and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
52 Weeks Ended
December 27,
2016
December 29,
2015
Cash flows from operating activities: Net
income including noncontrolling interests $ 120,573 $ 101,261
Adjustments to reconcile net income to net cash provided by
operating activities Depreciation and amortization 82,964 69,694
Share-based compensation expense 26,067 22,825 Other noncash
adjustments 12,075 5,697 Change in working capital 15,386
28,464 Net cash provided by operating
activities 257,065 227,941
Cash flows from investing activities: Capital expenditures -
property and equipment (164,738 ) (173,475 ) Proceeds from sale of
property and equipment, including insurance proceeds -
272 Net cash used in investing activities
(164,738 ) (173,203 )
Cash flows from
financing activities: Proceeds from (payments on) revolving
credit facility, net 25,000 (25,000 ) Repurchase shares of common
stock (4,110 ) (11,397 ) Dividends paid (52,054 ) (46,176 ) Other
financing activities (7,553 ) 1,047 Net cash
used in financing activities (38,717 ) (81,526 )
Net increase (decrease) in cash and cash equivalents 53,610
(26,788 ) Cash and cash equivalents - beginning of period
59,334 86,122 Cash and cash equivalents - end
of period $ 112,944 $ 59,334
Texas Roadhouse, Inc. and
Subsidiaries Supplemental Financial and Operating
Information ($ amounts in thousands, except weekly sales by
group) (unaudited)
Fourth Quarter Change Year to
Date Change
2016
2015
vs LY
2016
2015
vs LY
Restaurant openings Company - Texas Roadhouse 5 7 (2 ) 21 24
(3 ) Company - Bubba's 33 4 0 4 9 4 5 Company - Other 0 0 0 0 1 (1
) Franchise - Texas Roadhouse - U.S. 0 0 0 1 2 (1 ) Franchise -
Texas Roadhouse - International 1 1 0 3 1 2 Total 10 8 2 34 32 2
Restaurants open at the end of the quarter Company - Texas
Roadhouse 413 392 21 Company - Bubba's 33 16 7 9 Company - Other 2
2 0 Franchise - Texas Roadhouse - U.S. 73 72 1 Franchise - Texas
Roadhouse - International 13 10 3 Total 517 483 34
Company-owned restaurants Restaurant sales $ 480,730 $ 450,529 6.7
% $ 1,974,261 $ 1,791,446 10.2 % Store weeks 5,544 5,186 6.9 %
21,583 20,020 7.8 % Comparable restaurant sales growth (1) 1.2 %
4.5 % 3.5 % 7.2 % Texas Roadhouse restaurants only: Comparable
restaurant sales growth (1) 1.3 % 4.5 % 3.6 % 7.2 % Average unit
volume (2) $ 1,133 $ 1,130 0.3 % $ 4,802 $ 4,664 3.0 % Weekly sales
by group: Comparable restaurants (370 units) $ 88,003 Average unit
volume restaurants (27 units) (3) $ 75,330 Restaurants less than 6
months old (16 units) $ 88,912
Restaurant operating costs (as a % of
restaurant sales)
Cost of sales 33.8 % 35.4 %
(153) bps
33.9 % 35.9 %
(205) bps
Labor 30.7 % 29.2 %
147 bps
29.9 % 29.3 %
64 bps
Rent 2.1 % 2.2 %
(6) bps
2.1 % 2.1 %
(2) bps
Other operating 16.3 % 15.7 %
56 bps
15.5 % 15.4 %
10 bps
Total 82.9 % 82.4 %
44 bps
81.3 % 82.7 %
(134) bps
Restaurant margin (4) 17.1 % 17.6 %
(44) bps
18.7 % 17.3 %
134 bps
Restaurant margin $ ($ in thousands) (4) $ 82,387 $ 79,196
4.0 % $ 368,933 $ 310,762 18.7 % Restaurant margin $ (4)/Store week
$ 14,862 $ 15,272 (2.7 )% $ 17,094 $ 15,523 10.1 %
Franchise-owned restaurants Franchise royalties and fees $ 3,980 $
3,822 4.1 % $ 16,453 $ 15,922 3.3 % Store weeks 1,108 1,062 4.3 %
4,360 4,174 4.5 % Comparable restaurant sales growth (1) 0.8 % 4.0
% 2.0 % 6.5 % U.S. franchise restaurants only: Comparable
restaurant sales growth (1) 2.0 % 4.4 % 3.3 % 7.1 % Average unit
volume (2) $ 1,181 $ 1,164 1.4 % $ 4,929 $ 4,799 2.7 %
Pre-opening expense $ 5,294 $ 4,640 14.1 % $ 19,547 $ 19,116 2.3 %
Depreciation and amortization $ 22,246 $ 18,700 19.0 % $
82,964 $ 69,694 19.0 % As a % of revenue 4.6 % 4.1 %
47 bps
4.2 % 3.9 %
31 bps
General and administrative expenses $ 27,862 $ 24,992 11.5 %
$ 110,795 $ 92,336 20.0 % As a % of revenue 5.7 % 5.5 %
25 bps
5.6 % 5.1 %
46 bps
(1) Comparable restaurant sales growth reflects the change
in year-over-year sales for restaurants open a full 18 months
before the beginning of the period measured, excluding sales from
restaurants closed during the period. (2) Average unit volume
includes sales from Texas Roadhouse restaurants open for a full six
months before the beginning of the period measured, excluding any
sales at restaurants closed during the period. (3) Average unit
volume restaurants include restaurants open a full six to 18 months
before the beginning of the period measured. (4) Restaurant margin
(in dollars and as a percentage of restaurant sales) represents
restaurant sales less restaurant operating costs, including cost of
sales, labor, rent and other operating costs. Depreciation and
amortization expense, substantially all of which relates to
restaurant-level assets, is excluded from restaurant operating
costs. Restaurant margin is widely regarded in the restaurant
industry as a useful metric by which to evaluate restaurant-level
operating efficiency and performance. Restaurant margin is not a
measurement determined in accordance with GAAP and should not be
considered in isolation, or as an alternative, to income from
operations or other similarly titled measures of other companies.
Amounts may not foot due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221006461/en/
Texas Roadhouse, Inc.Investor Relations:Tonya Robinson,
502-515-7269orMedia:Travis Doster, 502-638-5457
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